These complications at Hinkley Point C, which is expected to power 6 million homes, have sparked new concerns about the UK's energy strategy and its ambition to decarbonize the grid by 2050.
The UK government's plan to achieve net zero by 2050 includes a significant role for nuclear energy, aiming to increase capacity from the current 5.88GW to 24GW by mid-century.
Simon Virley, head of energy at KPMG in the UK, stressed the importance of nuclear energy in transitioning to a net zero power system. He pointed out that failing to build the necessary capacity could lead to increased reliance on gas.
Hinkley Point C is envisioned as the pioneer in a new wave of nuclear plants intended to augment and replace Britain's existing nuclear fleet, jointly managed by EDF and Centrica. Nuclear power contributed about 14 percent of the UK's electricity in 2022. However, with the planned closure of four out of five plants by March 2028 and rising electricity demand, there is concern about potential power price increases.
Rob Gross, director of the UK Energy Research Centre, emphasized the link between energy security and affordability, highlighting the risk of high electricity prices if reliance on expensive gas increases.
The first 1.6GW reactor at Hinkley Point C, initially set for operation in 2027, may now face delays until 2031. The in-service date for the second unit remains uncertain, with project costs possibly reaching £46bn.
LSEG analysts predict that these delays could increase wholesale power prices by up to 6 percent between 2029 and 2032, assuming the second unit becomes operational in 2033.
Martin Young, an analyst at Investec, warned of the price implications of removing a large power station from the supply side.
In response to these delays, EDF is exploring the extension of its four oldest plants. Jerry Haller, EDF’s former decommissioning director, had previously expressed skepticism about extending the life of the advanced gas-cooled reactor fleet, but EDF has since indicated more positive inspection results. The company had already decided to keep the Heysham 1 and Hartlepool plants operational until at least 2026.
Nevertheless, the issues at Hinkley Point C raise doubts about the UK's ability to meet its 2050 nuclear build target of 24GW.
Previous delays at Hinkley were attributed to the COVID-19 pandemic, but EDF now cites engineering problems, similar to those experienced at other European power stations using the same technology.
The next major UK nuclear project, Sizewell C in Suffolk, will replicate Hinkley Point C's design. EDF and the UK government are currently seeking external investment for the £20bn project.
Compared with Hinkley Point C, Sizewell C's financing model involves exposing billpayers to some risk of cost overruns. This, coupled with EDF's track record, could affect investor confidence.
Additionally, the UK government is supporting the development of small modular reactors, with contracts expected to be awarded later this year.